Observers at the climate talks said signs of action from China and the United States had raised hopes of a deal

* China, U.S. help build confidence for climate deal

* Aid for poorer nations seen as vital to spur process

* Rich-poor divide remains a thorny issue

By Ben Garside

BONN, Germany, June 14 (Reuters) - U.N. climate negotiations made tentative progress on Saturday towards a text for a 2015 deal to bind all nations to cut greenhouse gas emissions.

The talks, which were heading to a close on Saturday, drew some 1,900 diplomats from 182 countries to Bonn to line up what their leaders will be prepared to sign up to next year to tackle emissions that U.N.-backed scientists say will cause more severe flooding, droughts and the sea level to rise.

Negotiators and observers said signs of action from China and the United States, the world's top two emitters, had raised hopes but they warned the talks could break down unless rich nations pledged billions of dollars in aid to poorer states by the end of the year.

"We are getting to the point where all parties have a sense of trust that we can act together to combat climate change, but my biggest concern is about the cash," said Seyni Nafo, a Malian envoy representing a negotiating bloc of over 50 African states.

Developed nations agreed in 2009 to raise aid to developing nations to $100 billion a year by 2020 but the U.N.'s "Green Climate Fund" set up to channel the cash lies empty after launching last month.

Nafo said $7-8 billion dollars in pledges were needed by the year-end to start projects such as installing solar power or insurance schemes to help farmers cope with crop failures.

CONTRIBUTIONS

Nations agreed last year that the deal, due to be struck in Paris in 2015 and to enter into force from 2020, would consist of a framework of contributions from all countries to be proposed early next year.

Negotiations over the past two weeks focused on what those contributions should include, such as having major economies setting emission reduction or peaking targets. Some said these should also include binding financial aid commitments by richer nations to support the poor.

But there was little headway on which countries should make the strictest contributions - a thorny issue that could end a 20-year old distinction that meant effectively only developed nations had to take steps to curb their greenhouse gas output.

FALLING SHORT

The talks heard climate change would affect billions of people over the coming centuries due to rising sea levels but that cutting emissions now would be able to slow and limit much of that rise.

"We have started something that we simply cannot stop anymore," said Anders Levermann of the Potsdam Institute of Climate Impact Research, referring to U.S. research published last month on the West Antarctic ice shelf that signifies we have "entered a new era of irreversible climate change".

One observer at that presentation was Caleb Otto, U.N. Ambassador for Palau, a tiny island in the western Pacific Ocean identified among the countries with the most land to lose.

"For us in the Pacific we're already being submerged ... It's hard for people in the Convention to understand," he said, referring to the U.N. Framework Convention on Climate Change under which the talks are held.

The contributions of all countries are expected to fall well short of the 40-70 percent cuts U.N. scientists say are needed by 2050 to reach a global goal to limit temperature rises to 2 degrees Celsius (3.6 Fahrenheit) above pre-industrial levels.

To address the shortfall, a group of South American nations including Colombia and Peru called for a review process after the contributions come in early next year but South Africa said any assessment need only happen after the Paris deal is struck.

The formal process resumes in October with a week-long Bonn session and aims to agree on the main elements of a deal at a high-level session in Lima, Peru at the end of the year.